2025: The Year that Was

Employer

Hello December!

What a year it has been. As we close out 2025 and pause to reflect, it’s fair to say this year has tested us all. Economic uncertainty, market shifts, and evolving workplace dynamics created challenges few of us could have anticipated. What felt like each piece of good (ish) news seemed to be quickly followed by another wave of unpredictability. Cost pressures remained stubborn: rising expenses, inflation that outpaced wage growth, and increasing regulatory complexity. As Aotearoa gradually emerges from an extended period of slowed activity, many organisations are still feeling bruised. COVID-19’s lingering impact, followed by recession, left many businesses unable to fully rebuild their balance sheets, and that fragility has shaped much of 2025.

Labour Market
As economic pressures continued, the job market gradually slowed down, causing the unemployment rate to rise from around 5.1% early in 2025 to 5.3% by September — the highest in almost a decade. We have seen restructures and redundancies continue, particularly in sectors facing slowed activity and reduced consumer spending. In early 2025, the minimum wage increased from $23.15 to $23.50 per hour, adding further cost pressures for many employers already operating in a challenging environment. Statistics show that salary and wage increases averaged 2.1%, falling short of the 3% inflation rate as at September 2025. For households, this has added financial pressure and kept spending cautious. While the year hasn’t tipped into crisis mode, it has underscored the reality of incomes being squeezed and highlighted the importance of resilience, careful planning, and adaptability.

On the immigration front, we saw plenty of our talent on the move across the ditch. Data shows that in the year to September, nearly 73,000 New Zealand citizens left the country, with around 58% heading to Australia; this is notably one of the largest outbound movements on record. On the flip side, immigration reforms have made changes to the Accredited Employer Work Visa (AEWV); making it easier for employers to access skilled and lower-skilled labour.

Budget Announcement
This year’s Budget also delivered several notable changes aimed at stabilising the economy and supporting long-term growth. Significant funding was committed to core infrastructure, including hospitals, schools, rail maintenance, defence, roading, and prisons; along with meaningful boosts to frontline services such as education, healthcare, corrections, and police. Businesses gained a strong incentive through the new ‘Investment Boost’ initiative, which allows an immediate deduction of 20% of the cost of new assets (excluding land and residential property), making 2025 an opportune year for upgrades and productivity improvements. Major KiwiSaver changes are set to take effect from 2026, with employer and employee contribution rates rising to 3.5% and then 4% by 2028. Government contributions are being halved, and earners over $180k are losing access to government support. In a positive step, 16–17-year-olds will become eligible for employer contributions, helping younger workers build earlier savings habits. While these adjustments will increase payroll costs, they also present an opportunity for employers to position KiwiSaver as a valuable attraction and retention tool in a competitive labour market.

Government’s Policy Reform
After years of frustration with the Holidays Act, where employers struggle to understand and apply the legalisation correctly and employees struggle to understand their entitlements; 2025 finally brought meaningful progress toward reform with the proposed “Employment Leave Act” - shifting leave to a simpler, hours-based approach. While not yet officially law, the reforms are progressing through government, with final announcements expected mid to late 2026. Once passed, employers and payroll providers will have a generous 24-month implementation window to update systems and employment agreements. Under the proposed model, employees will accrue annual and sick leave from day one, based on the hours they work, and will be able to take leave in hourly increments. Casual and variable-hour workers will receive a 12.5% Leave Compensation Payment instead of annual and sick leave accruals. Other changes include the ability to cash up 25% of annual leave and fairer treatment for employees returning from parental leave. These reforms aim to deliver clarity, flexibility and fewer payroll headaches; however, early preparation will ensure a smooth transition once the new Act comes into force.

Recruitment Landscape
In the recruitment landscape, 2025 was a year of hard choices and people-centred strategy for employers. Attraction and retention remained ongoing challenges, and the organisations that performed best weren’t necessarily those with the largest salary budgets, but those that invested in culture, flexibility, leadership capability, and genuine employee experience. Internal mobility also became a key focus, with many businesses prioritising upskilling from within, strengthening capability pipelines, and creating clearer career pathways.

On the candidate side, we saw a noticeable shift in mindset. Job seekers became increasingly selective, values-driven, and future-focused. After several turbulent years, the desire for long-term stability has returned; a marked change from the job-hopping behaviour common in the post-COVID environment. Those who stayed proactive, leveraged networking and upskilling opportunities, and remained open to growth have positioned themselves strongly heading into 2026.

Artificial intelligence (AI) is continuing to be a powerful enabler, where we have seen technological development and transformation in advanced tools becoming available; especially with the backend of the recruitment process, such as sourcing and screening candidates and reducing admin tasks. However, its true value emerges only when balanced with human judgement, empathy, and genuine relationship-building. And ultimately, 2025 has reminded us just that - recruitment is as much about relationships as it is about results. Employers value honest advice and meaningful market insight more than ever, while candidates appreciate genuine support and transparent communication. As recruiters, our role continues to evolve: we are not just matchmakers, but trusted partners helping both sides navigate an increasingly complex and shifting landscape.

Despite the hurdles, we have seen incredible strength across our Bay of Plenty and South Waikato communities. From executive appointments driving strategic change to temporary placements that kept businesses moving through peak periods, every placement has reinforced our belief in the talent, resilience, and determination within our regions.

Looking Ahead
2025 was a year of reflection, recalibration, and resilience. Looking ahead to 2026, there is a genuine sense of cautious optimism. While the economy remains delicate, the foundations for improvement are steadily taking shape. Businesses are approaching hiring with greater intention, candidates are prioritising long-term fit, and the qualities that matter most; adaptability, emotional intelligence, and people-first thinking; are increasingly coming to the forefront. As we wrap up 2025, now is the perfect time to acknowledge our collective resilience and prepare for the opportunities ahead.

On behalf of the team at Talent ID Recruitment we wish you all a joyful festive season and a well-earned summer break. May you have time to rest, reconnect with whānau and friends, and recharge for the opportunities that are in store for 2026.